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This paper aims to concentrate on the conscious and systematic managerial activities associated with handling knowledge in an organization [i.e. knowledge management (KM) practices] for the purpose of improving innovation performance through proactive management of knowledge assets. This study explores the impact of KM practices on innovation performance in the research and training center of government apparatus.

This research provides empirical evidence on how various KM practices influence innovation performance. The results are based on the survey data collected in four areas of research and training centers of government apparatuses in Indonesia. Partial least squares are used to test the hypothesized relationships between KM practices and innovation performance.

The study found that IT practices and work organizations are positively and significantly related to innovation performance. This means that better implementation of information and technology will push innovation performance. The study also points out that knowledge-based compensation practice is one of the KM practice variables which is negatively and significantly related to innovation performance. This result shows that innovation performance will decrease by compensating knowledge improvement.

This study implies that in developing innovation performance, the research and training center should not focus on providing compensation, as it will only increase the costs rather than the innovation performance itself.

This study adds a knowledge-based view of government agencies by demonstrating the significance of KM for innovation performance. This study is also valuable from a managerial perspective, as it highlights the most effective KM practice to improve organizational innovation performance.